Gabbard, Levy and Carona struck an unwritten deal. In exchange for sponsoring HALT demonstrations, publicly praising the product and writing a product endorsement on Orange County Sheriff's Department letterhead to the state Legislature, Carona would get thousands of dollars in campaign contributions. According to information contained in DA files, Carona asked Levy to get $100,000 from Gabbard and CHG stockholders.

The sheriff was so elated by the prospective fund-raising coup that he apparently offered an additional concession. On Feb. 18, 2000—10 days before the first of two Newport Beach fund-raisers sponsored by CHG for Carona—Levy sent Gabbard a handwritten memo, which has been obtained by the Weekly.After outlining details of the upcoming fund-raiser at the exclusive Pacific Club, Levy wrote that the sheriff "would like you to know that you could use certain inmates for soldering work" to mass produce the HALT product.

Four years later—with the DA's office in hot pursuit of Jaramillo, detectives met with the sheriff, who'd agreed to field questions only if his answers were not recorded. Interview notes show that Carona claimed "he didn't recall" offering Gabbard use of inmates. "However, if he did, he doesn't believe that would have been illegal," wrote DA investigator Dina Mauger after the May 5, 2004, interview. "Carona said he is always looking for work for inmates to keep their morale high and to provide service to the community."

What, if any, inmate work Carona arranged for Gabbard's private company isn't known. According to his numerous emissaries, the sheriff refuses to agree to an interview with the Weeklyunless all questions are submitted in advance for his approval. Speaking to other news outlets, Carona has hinted that he's comfortable with scrutiny focused solely on Jaramillo, his former longtime best friend, closest adviser and second in command at the 3,000-plus-employee agency. The sheriff says he is "disappointed" that Jaramillo might have been involved in unethical activities.

Gabbard certainly wasn't disappointed in Carona. The sheriff spent untold thousands of taxpayer dollars to hold a HALT demonstration at El Toro on March 16, 2000, and six days later sent a glowing product-endorsement letter to state officials considering a plan, Senate Bill 2004, to mandate Gabbard's product on all California vehicles. "Our profession and our communities would be well-served" if the plan was approved, the sheriff wrote. He didn't tell legislators that CHG had become his largest fund-raiser.

After Carona's endorsement, Gabbard claimed he was asked to sponsor an official race car with Carona's name on it. Instead, he arranged for the sheriff's 45th birthday party on May 18, 2000, at Villa Nova restaurant in Newport Beach. It wasn't so much a party as a fund-raiser that poured illegal contributions into Carona's campaign. Someone took a picture of a smiling sheriff with Gabbard next to a $60 cake.

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It's against the law to evade contributions limits, reimburse a contributor or conceal a contributor's true identity. In a Feb. 8, 2004, interview with FBI agent Tony Alston and DA investigator Mike Welch, Gabbard and his live-in girlfriend, Toni Van Schultze, a beauty-shop owner also active in CHG management, initially denied that almost $40,000 in contributions to Carona were illegal.

VanSchultze:It was their money. It was people that we knew, and like I said, we support the Orange County sheriff.

Even when the FBI agent persisted with questions, Gabbard and Van Schultze continued to lie. Alston finally told them that he had "done a little research" on Carona's campaign committee and discovered questionable contributions tied to Gabbard's events. The agent repeated his questions and got a new answer: "maybe" there had been illegal contributions.

Eventually, Gabbard and Van Schultze admitted that they wanted to raise lots of money for Carona because "this was what we had to do for our [HALT] legislation that we needed." The problem was that the couple couldn't find legitimate contributors who wanted to donate to the sheriff. A plan was devised to reimburse reluctant Carona contributors with cash or stock in CHG.

"I see," the FBI agent said after Gabbard outlined the reimbursement scheme.

Then Gabbard blurted out, "George [Jaramillo] said it was legal!"

"It was George's idea?"

"Yeah. George said this was the way to get the money to Sheriff Carona's campaign."

"Do you remember when that happened?"

"Well, that was . . . Uh . . . I don't know."

Jaramillo may have carried out questionable acts while he was assistant sheriff, but masterminding the fund-raising sham was not one of them. The prime witness to this fact would be Gabbard himself. He has repeatedly told investigators that Carona didn't introduce him to Jaramillo until March 16, 2000—two and a half months after the sheriff, Levy and Gabbard came up with the demos and endorsement idea in exchange for contributions.

Despite Gabbard's criminal background, his lies in interviews and his admission to bankrolling fake contributions, Rackauckas decided he needed Gabbard to catch Jaramillo. On April 20, 2004, the DA's office acknowledged Gabbard's glaring inconsistencies in a memo but nevertheless gave him immunity from prosecution. Five months later, Jaramillo—who'd been fired by Carona in March in a self-styled management shake-up—and Hill were arrested.